Rajasthan High Court Stays Parallel GST Proceedings, Says Only One Officer Can Initiate Action on Same Matter

The Rajasthan High Court has stayed parallel GST proceedings and recovery action against a Jaipur-based exporter after finding prima facie that tax authorities may have initiated duplicate proceedings for the same financial year.

A division bench of Acting Chief Justice Sanjeev Prakash Sharma and Justice Bipin Gupta issued notice to the department and observed that under the GST law, only one proper officer can initiate proceedings on the same subject matter.

“Considering the provisions of Section 6(2)(b) of the Central Goods and Services Tax Act, only one proper officer can initiate proceedings. The proceedings, therefore, initiated by DRC-01 dated 29.01.2024 and further orders passed prima facie stand vitiated in law more so as the earlier order passed on 27.03.2024 by the Audit Wing is already under challenge in appeal where predeposit has also been made," the court said.

The petitioner, Balaji Exports, contended that its books for FY 2018-19 were audited by the Deputy Commissioner, Business Audit Wing-4, Rajasthan State Tax, Jaipur, following which proceedings were initiated under the CGST/RGST Acts.

A show-cause notice was issued in that matter, culminating in an order dated March 27, 2024. That order is already under challenge in an appeal.

Despite this, the petitioner said, the Joint Commissioner, Circle-C, Jaipur-IV, issued a fresh DRC-01 notice on January 29, 2024 for the same financial year and the same cause of action. This was followed by an order dated April 27, 2024 raising a tax demand of around Rs 86 lakh.

According to the petitioner, it had also filed a rectification application seeking closure of the later proceedings in view of the earlier adjudication order, but the request was rejected, prompting the writ petition.

The petitioner argued that once adjudication for the same period had already been completed, a second set of proceedings by another officer for the same issue was impermissible and contrary to Section 6(2)(b) of the CGST Act.

Accepting this contention at the prima facie stage, the High Court said the proceedings initiated through the January 29, 2024 DRC-01 notice and the consequential orders appeared legally unsustainable, particularly since the earlier order was already under appeal and the required pre-deposit had been made.

The court accordingly stayed the proceedings arising from the DRC-01 notice as well as the recovery order dated April 27, 2024. The matter will next be heard on July 22.